In my early 50s and little set aside for retirement; what should I do?

A reader wrote in the other day asking for some advice: I am 51 and have only 30,000 for retirement, I was on track until a stroke derailed me and I will have those bills paid off next year. I have no idea what to do and do not want to work forever. Can you help me or point me in the right direction? – “Nana”

Thanks for your question Nana – I like to answer these as often as I can – I would rather help you for free than have you go waste money on a financial advisor or the likes. That’s not to say that can’t provide value – rather that it’s better to learn this stuff on your own and take control of your financial situation -and you don’t need to be a college grad to see how simple it really is. To answer your question I first want to tell you, you’re not alone. Many people your age haven’t suffered a stroke and had to deal with all of those additional health related expenses, and they still haven’t saved a dime at your age. Fortunately, you can still setup a retirement plan right now on your own that will help ease your mind (or make you realize how serious you need to get). Because I already wrote about this on another website, I’m going to copy my work from that article and share it here (it doesn’t exactly describe your situation but it certainly applies to you):

From my article written on ManoftheHouse.com:

“Wells Fargo Survey Says 80 May Be the New 65 for Retirement Age” a recent Business Week article proclaimed. Given that life expectancy for Americans is now at around 78, the new survey statistics are downright scary. I’m looking forward to traveling the world before—and after—retirement, without financial worries. No doubt you, too, are looking forward to some days of ease after a long career of working. But there’s no guarantee. My late grandfather worked until he was in his 80s as a mechanic. Climbing in and out of greasy engines was not likely the way he envisioned his last years.

Still, setting up a a simple retirement plan right now will go a long way to helping make your golden years truly golden. Far too often, people make retirement planning, like investing, way more difficult than it should be. Begin with writing down your age and how much savings and/or investments you currently have. Then, pick an age you want to retire, determine how much money you will need when you retire, and work backward to determine how much you need to put away and/or invest from each paycheck.

Keeping it simple will provide you with a decent starting point to determine if when you want to retire is aligned with when you will be financially able to do so. After this simple exercise, if you determine, based upon simple calculations, that your retirement age isn’t possible, readjust your assumptions. Pick a different retirement age or determine how much more you will need in additional savings and investments each paycheck.

You can always reevaluate down the road as you get closer to retirement to determine if you’re on track. Instead of getting tied up now in excruciating detail surrounding your retirement with taxes and inflation and social security income and such, start with the basics, make some assumptions, set some goals and milestones and put your saving and investing on auto-pilot.

A Scenario

Let’s use a fictional situation to explore the questions about saving for retirement. Meet Mike. He’s 30 years old, he hasn’t saved a dime yet and he wants to retire at 50. He makes about $50,000 a year. Is his plan retire even feasible? Here’s what Mike should do to find out: estimate how much it will cost for him to live after retirement and how long he believes he will live after he retires. Then he must estimate how much he can sock away and invest.

Mike determines that to keep his current lifestyle in retirement he will need about $2,000 per month or $24,000 per year. He believes his house will be paid off by 50, and his expenses will go toward paying for utilities, medical expenses and occasional travel. Based upon the current male life expectancy of 75, he expects to need that same amount of income for 25 years. However, he wants to build a cushion of 10 years in case he lives to 85, so he will need $24,000 per year for 35 years or $840,000 by the time he hits retirement.

Keep in mind, this is a very basic approach. You could make it much more complicated, but there’s no need right now. Our goal is to complete a high-level evaluation of a basic retirement plan that you can create on your own.

Mike determines that based upon his current bills he can put away about 10 percent of his take-home pay to invest each month—about $400 or $4,800 per year. Is this enough to allow him to retire at 50 if he needs $840,000 dollars? Doing the math with this simple calculator (assuming an 8 percent historical annual return on investments in the stock market), the answer would be no. In fact, Mike would be well short.

Another option: Mike could enter his goal of $840,000 and have it calculate how much he would need to save and invest (he would need to invest $18,355.86 per year to meet that goal).

Since Mike realizes there’s no way he can save that much each year, it’s back to the drawing board. Given his hope to retire at 50, investing only $400 per month is not going to cut. It’s probably time for Mike to make a more realistic goal based upon his ability to save and invest.

How Much Should I Be Saving for Retirement?

He decides he’ll retire at 60, meaning he would only need funds for 25 years instead of 35 and would have far more time to save. If he stuck with his $400 per month investment, he would only need $600,000 at retirement (based upon his post-retirement needs of $2,000 per month to live, or $24,000 per year and 25 years, so $24,000 X 25 = $600,000). Let’s run the numbers and find out what’s happened.

Mike is much closer now—he’s only off about 55k from reaching his retirement goal. By tweaking how much he invests each month or by working for an additional year, Mike will have a solid, basic retirement plan in place. Drop the numbers in the alternative way to find out exactly how much more Mike will need to invest over the $4,800 each year to retire at 60. As you see below, Mike will need to bump up his investments by about $500 per year to meet this goal.

As you can see, it’s not difficult to determine a basic retirement plan that tells you how much you need to put away and invest each month until your retirement. Stick to your plan and you should be able to beat the latest gloomy odds and enjoy the life you can imagine.

Trading Like A Professional: How To Creatively Become Your Own Trading Coach

If I were to ask you who the most powerful trading firms in the world were, what your answer be?  Most likely, you would answer with the names such as Goldman Sachs, Deutsche Bank, UBS, HSBS, and JP Morgan.  And you would be right.  These are the most powerful trading firms in the world.  Now, have you ever considered the fact that each of these trading firms have a trading floor where all of their traders report to work each day?  Probably not.  However, this is very important.  Stay with me.

Why do you think that major investment banks have a physical foreign exchange trading floor?  Why don’t they simply allow all of their traders to log in remotely from home?  If they did allow their traders to just stay at home and trade each day, they could probably save hundreds of thousands of dollars each month in operating costs.  The reason is simple.  Trading at home by yourself is extremely challenging.  Most people who are interested in learning to trade will be trading from home by themselves.  This lonely work environment poses several significant challenges to the average person, but the good news is that as stay-at-home traders, we can still approach the market with the same business-like professionalism of a trading firm.

Who Is Your Team Leader?

In a hedge fund or true prop trading floor, each trader will have a mentor and manager that he directly reports to.  This mentor/manager will offer constructive feedback to the trader concerning areas where he needs to improve, and the manager will help the trader continually refine his trading edge.  Furthermore, the manager will help the trader monitor risk at all times, and a trader undergoes continual evaluation on a daily basis.

If you are trading from home, you are at an immediate disadvantage because you have no one objectively viewing your trading activity and offering feedback.  A trade coach is an essential element of trading success at large hedge funds and prop floors.  Therefore, a stay-at-home trader has two choices.  Either he can attempt to find a very successful and experienced trader and try to convince him to become his trading coach, or he can become his own coach.  The reality is that most successful traders do not have the time to offer micro-guidance to aspiring traders, so the most likely scenario is that a stay-at-home trader must become his own trading coach, whether he is trading a real account or a forex demo account.

Review Time

This is such an essential element of trading success, but this is rarely done by most stay-at-home traders.  You must be your own coach and make the best financial decision like when you try to get a usda mortage.  One way to effectively do this is to take a screen capture of every trade you take each day.  Make notes on the chart concerning why you took the setup, how you managed it, and the outcome of the trade, and then file it away.  At the end of each week, conduct an objective and honest review of your trading decisions for the week.  How well did you stick to your plan?  Did you manage trades appropriately by staying within predetermined risk parameters?

Use Your Losers

Many new traders are very attached to the emotional sting of the loss of money.   Therefore, when they suffer a losing trade, they attempt to move on as quickly as possible and look for the next setup.  This is a critical mistake.  Your losing trades have invaluable information.  Review them, critically analyze them, and attempt to get a clearer understanding of your trading strategy.

When a trade works out and you make money, what happened?  Most likely, exactly what you thought would happen!  But when you have a losing trade, something went wrong.  Something happened that you most likely were not expecting.  Identify that.  By analyzing your trades in this manner, you may begin to unearth clues from the market that tell you not to take trades in certain market conditions or at certain times of the day.  Commit to being your own trade coach!

Short term loans, a last resort for many cash strapped folks

Many people would argue against taking out short term loans for an emergency because of the interest rates on some of these types of loans. Unfortunately, the reality of life is that sometimes this maybe you’re only option. Maybe you’re living pay check to pay check, and your car breaks down and you don’t have anybody else you can count on – and you must get to work – and public transportation is not an option. Maybe you’re a single mother with no family or friends that can help you and this is your last resort. Don’t beat yourself up – it’s just not worth it. Do what you need to get back on your feet, take a high interest loan and pay it back immediately. Then, decide on how to best avoid these situations in the near future.

It’s not an ideal situation but if you have to take out a payday type loan once in your life, maybe it’s the wakeup call you need to realize the importance of smart financial planning. Regardless, you haven’t been responsible and have yet to create an emergency stash – so this is a wakeup call to you.

In general, you should have roughly 6 months living expenses saved up in your emergency stash. Some would argue this is not enough – it really depends on where you live and what you anticipate in the form of potential emergencies in the near future. In today’s economy, you never know when you might get the pink slip. Because some industries and professions are far more difficult to find employment, such as higher management types of positions, it may take a year or more for these types of professionals to find a new job – they should a year or more worth of living expenses saved up in their emergency fund.

Only after you’ve created an emergency fund should you move on to saving and investing and aggressively paying down any debt you may have accumulated over the years. Some may argue that you should pay down debt first, and it’s a valid argument depending on the interest rates of that debt, however, if you run into another emergency you may be forced to incur debt at an even higher rate, so you should cater your decision based upon that type of information – would it be more costly for you to take on additional debt in case of an emergency or create a stash and earn interest on that money.

This is a guest article by Mark.

Frugal Pet Tips to save you money

If you’re like most pet owners, your pet is one of the most important things in your life. In fact, many pet owners think of their pet as one of the children or family members and they take very good care of them to ensure their health, safety and comfort. Even if you are on a strict budget, you can take good care of your pet with the following frugal pet tips that you can use.

The most important thing you can do for your pet is to feed them high quality food. This may seem like the opposite of being frugal because the high quality pet food is typically more expensive than other pet foods with lower quality. But there are several reasons why spending a couple extra dollars on good pet food is better than skimping on the food. For one thing, your pet will fill up faster on the upscale food. Much of the cheaper pet foods use fillers. Fillers are products like corn and other products that simply “fluff” up the food to make it look like more than it really is. But in addition to making it look bigger, it simply does not fill up your pet. They may get full faster, but they will be hungry more often and they will want to eat more. But with the better food, your pet will get their fill and they won’t be hungry more often than they should be.

Another reason to feed your pet high quality food is because it is good for them. With some lower quality foods, you risk the chance of your pet getting urinary tract infections and other health problems. Taking them to the vet to solve these problems can get rather costly. But by choosing the better foods, you can cut down on vet appointments other than their normal checkups.

Speaking of pet food, another tip for frugal pet ownership is to buy your pet food in bulk. When you compare prices between getting a 50 pound bag of dog food versus a 10 pound bag of the same brand, you will notice that there is a huge amount of savings. In some cases, you could have paid for a 50 pound bag of pet food after buying just a couple of the smaller bags over time. Just be sure to store it in a cool dry place away from where your pet can get into it while you’re gone.

Vet costs can be astronomical for some problems that pets often have. But you can help cut down on vet visits by keeping your pet active. Do you like to play with your pet? If not, you could be negatively affecting their health. Take time each day to play fetch with them or keep them active. Take your dog for walks and play with your cat by using toys, balls of yarn or something else that will keep them busy. By doing this, you will help them stay healthy which will reduce the number of times you will have to visit the veterinarian.

Getting discount pet supplies is another way for pet owners to be frugal. You don’t have to spend extra money on fancy-shaped bowls or other things for your pet. They will eat and drink out of any container that you give them. You can also save money by getting some inexpensive pillows and throws to make them a comfortable and cozy bed rather than spending a lot of money on something that your bed will not appreciate.

Using these tips for frugality will help you save money on caring for your pet, but they can also make your pet happy and loved. Your pet doesn’t need the best of everything. They just want their basic needs attended to and to know that you love them.

Check out these cool Red Dingo Tags too!

5 Ways to Save on Motorcycle Insurance

Riding a motorcycle is fun. Most people who own one ride for enjoyment, not as a means of transportation. The thrill of cruising down the highway, with the wind streaming past you, is something that can’t be equaled within the confines of a car or truck. It’s a sense of freedom. If you operate your motorcycle on public roads you will need to carry adequate insurance. It’s the law. Following are a few tips on how to save on motorcycle insurance.

Motorcycle Safety Course

Because a motorcycle is inherently dangerous, due to the fact that there are only two wheels and the machine must be balanced, getting a break on insurance costs can be difficult. One way to get a cheaper rate is by taking a motorcycle safety course. In some states, a course of this type is required in order to get a motorcycle operator’s license. There are a number of reasons to take a safety course, even if it’s not required by law. One of them is that operating your bike during the safety course will allow you to become familiar with its controls. You will get to know where they are and how the different controls affect the bike’s operation. It will also help you develop a sense of confidence that will come in handy when you take to the open road. By the time you receive your certificate, you’ll instinctively know the difference between grabbing the brake instead of the clutch if you need to stop quickly. Going through a motorcycle safety course will almost certainly help lower your insurance rates.

Seasonal Coverage for Seasonal Riders

Living in an area of the United States that has snow and cold weather for part of the year usually means that motorcyclists put their bikes away. Part of the reason for doing so is because riding a two-wheeled vehicle on ice and snow is conducive to falling over–although some riders do ride whenever the roads are clear, despite the cold. However, most riders store their bikes during the winter and insurance companies reward them by only charging seasonal rates. Seasonal rates vary according to your individual policy, but in most cases it goes by quarters–either 3 or 6 month layoffs apply. During this period, you should still maintain comprehensive coverage in case the bike is stolen.

Prices Vary According to Model

Motorcycle insurance rates vary quite a bit depending on the type of motorcycle you’re trying to insure. It also depends on how old the bike is. Sports bikes cost more to insure than a standard bike. New bikes cost more to insure than older bikes, unless they’re antiques. Touring bikes cost a lot to insure, but that’s because they’re more expensive machines. If you customize your bike, you can also expect to pay more for insurance. Hand in hand with the cost of insurance based on motorcycle type is your age. Because the majority of sports bike riders are young and relatively inexperienced, insurance rates are comparatively high. As you get older, you probably aren’t prone to taking the same chances as when you were younger, and the added experience that comes with decades of riding experience may translate into reduced insurance rates.

Keep Your Bike in a Garage

If you’re fortunate enough to own a garage where you can park your motorcycle at night, your insurance rates will be lower than if you have to park on the street. The reason for this is that there is a lot better chance of the bike being stolen if you park on the street. Your rates may be even lower if the garage is attached to house, and further discounts may apply if the home has a security system. You may even be eligible for reduce rates if you carry a chain with you and lock your bike up wherever you go. Be sure and let your insurance agent know of your personalized security precautions so you can enjoy the lower rates.

Shop for the Best Price

As with any other type of insurance, you should shop for the best price on motorcycle insurance. If you already have an insurance agent you should contact them and tell them you’re shopping for a good rate on motorcycle insurance. Make some calls to other agencies ahead of time and get a quote for comparison. You can do the same by going online and getting a few quotes. This will allow you to determine if your present agency is giving you their best rates. Be sure and ask for discounts, including a discount if you own more than one motorcycle. You may also be eligible for a discount if you’ve been with the company for a long time, or if you have other types of policies in effect, such as home, life, or auto insurance.

Guest post from Sydney Sommers. Sydney writes for MotorcycleInsurance.com.